What Did Groupon Do This Time?
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The U.K. Office of Fair Trading has been discretely investigating Groupon’s British unit since July. The OFT expanded its investigation after receiving a complaint about Groupon from the Advertising Standards Authority.
“Given Groupon’s track record, we have serious concerns about its ability to adhere to the advertising code,” the Advertising Standards Authority said in a statement. “It is in the public interest that we refer the matter to the OFT.”
The ASA was prompted to make the referral after finding Groupon to have broken advertising code 48 times in the first 11 months of 2011. The ASA has made 11 formal rulings of code breaches against Group, which it has published, and there have been a further 37 informal breaches that the ASA has addressed without publishing details.
Groupon’s most recent breach came last week when the ASA banned a promotion e-mail offering discounted cosmetic surgery. The watchdog said it “pressured” consumers into hurriedly making potentially life-changing decisions in just a few hours.
In a statement released by the ASA, the agency said it was referring Groupon over three specific concerns: “failure to conduct promotions fairly, such as not making clear significant terms and conditions”; “failure to provide evidence that offers are available”; and “exaggeration of savings claims”.
Last month, Groupon became the second-biggest Internet company to make a market debut, behind Google (NASDAQ:GOOG) in 2004. Listed on the New York stock exchange with an initial valuation of $12.7 billion, the company has seen its share price slump since the day of its initial public offering.
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Groupon joins other hotly anticipated Internet IPOs — from Angie’s List (NASDAQ:ANGI) to LinkedIn (NYSE:LNKD) — that have seen prices shrink as investors pull back in a time of much economic uncertainty.
Groupon shares are trading up 4.59% today as of 12:56 p.m. EST.